e-Conomy SEA 2022: PH's digital economy is expected to exceed $20 billion by the end of the year.
According to this year's e-Conomy SEA research, titled Through the waves, towards a sea of opportunity, the Philippine digital economy is on course to reach $20 billion GMV in 2022 after rising at a 22% annual rate. The local digital economy is expected to reach $35 billion GMV by 2025, with a 20% compound annual growth rate (CAGR), and to reach $100 to $150 billion GMV by 2030.
 |
| e-Conomy SEA 2022: PH's digital economy is expected to exceed $20 billion by the end of the year. |
The annual research, which combines Google Trends, Temasek insights, and Bain & Company analyses, as well as industry sources and expert interviews, focuses on the digital economies of six Southeast Asian (SEA) countries: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
E-commerce is predicted to reach $14 billion GMV by 2022 and $22 billion GMV by 2025, growing at a 17% annual rate as it propels the local digital economy. Despite a partial return to in-store shopping, e-commerce accounted for 70% of the total Philippine digital economy.
E-commerce, food delivery, and video-on-demand are the top three digital activities among digital urban users, with adoption rates of 88%, 69%, and 58%, respectively.
Here are the remaining essential observations concerning the Philippine digital economy:
- Transport and food delivery are expected to achieve $1.9 billion in GMV in 2022 and rise at a 29% CAGR to $4 billion in 2025. As more individuals eat out, demand growth is becoming more regular. The gradual return to work, increased in-store buying, and the rebirth of tourism are propelling Transport's rebound from lockdown lows.
- Travel is rising, with 180% YoY growth expected to reach $1 billion in GMV by 2022. As the recovery to pre-pandemic levels is likely to be gradual, travel is expected to grow at a 44% CAGR by 2025, with the sector reaching $4 billion in GMV.
- Online media, including music, video streaming, and online gaming, is expected to reach $3.1 billion GMV in 2022, representing a 17% increase yearly since the pandemic's high last year. 37% of paying customers in the Philippines stated they play online games at least once a week, the highest in Southeast Asia.
- Digital financial services continue to expand, with lending and remittances reaching $6 billion this year. Remittances are estimated to generate $4 billion in Gross Transaction Value (GTV) at a 32% year-on-year increase. Digital payments will drive $75 billion GTV in 2022 and grow at an 18% CAGR to $123 billion GTV in 2025.
See Also: Google Career Certificate scholarships would give 39,000 Filipino youths job-ready skills.
Over time, the Philippines will attract more investors.
The Philippines will be the second fastest expanding digital economy in SEA (after Vietnam) in 2022 (at 22% YoY) and a hot investment hub across industries, including digital financial services, between 2022 and 2025 (at 20% CAGR).
- This year, the Philippines has the fastest expanding digital investments industry in Southeast Asia, with a 63% growth rate from 2021 to 2022. Compared to the current position, 73% of investors (the second highest in SEA after Vietnam) predict deal activity to expand the country's local digital economy between 2025 and 2030.
- Digital financial services are on the rise, and the industry continues to pique the interest of investors, accounting for 56% of total investor capital in 2022 and raising around $450M in the first half of 2022 alone. Mynt and Voyager are both Filipino unicorns in the financial area.
- Web 3.0 has received significant investor funding, raising $90 million in the first half of 2022, with investors optimistic about cryptocurrency adoption in the Philippines, one of the fastest growing worldwide.
“The Philippine digital economy remains resilient despite headwinds and continues to provide boundless opportunities as it is projected to reach $20 billion GMV by the end of the year. This year’s e-Conomy SEA report also suggests that the country will be a leading investment destination, with over 70% of investors expecting deal activity to increase from 2025 to 2030. Google is committed to helping the Philippines sustain the growth momentum of its digital economy through local partnerships, programs, and products that aim to improve the lives of Filipinos,” said Bernadette Nacario, Country Director, Google Philippines.
“The Philippines’ digital economy is one of the more attractive investment hubs in the region. Across internet sectors, there remains tremendous whitespace for growth as the ecosystem drives greater digital inclusion in the country, particularly outside of metro areas. We expect growth to come from not only the physical goods and services internet sectors but also digital financial services across payments, lending, and other Fintech products,” said Willy Chang, Associate Partner at Bain & Company.
“The seventh edition of the e-Conomy SEA report shows that the digital future of the Philippines is bright as it has the fastest growing digital investments sector this year in the region. The Department of Trade and Industry is committed to digitalizing our MSMEs and working closely with our private sector partners like Google to help reach the full potential of the country’s growing digital economy,” said Alfredo Pascual, Secretary, Department of Trade and Industry.
The full report is available here.